US <a href="https://thenationalnews.com/tags/inflation" target="_blank">inflation</a> rose more than expected last month, underpinning expectations that it will be some time before it reaches the Federal Reserve's long-term target. The Consumer Price Index (CPI) rose 0.3 per cent in January, the Labour Department reported on Tuesday. On an annual basis, inflation rose 3.1 per cent, down from 3.4 per cent in December. Core CPI – which excludes food and energy – rose 3.9 per cent annually. Economists surveyed by FactSet estimated inflation would fall to 2.9 per cent year-on-year, with core CPI at 3.7 per cent. Had inflation fallen in line with expectations, it would have been the first time since 2021 it would have sat below 3 per cent. Shelter prices, which rose 0.6 per cent, contributed to more than two-thirds of the all-items increase, the Labour Department said. Meanwhile, the energy index fell 0.9 per cent. The latest CPI report comes as officials at the <a href="https://www.thenationalnews.com/tags/federal-reserve" target="_blank">Federal Reserve</a> consider when they will begin cutting <a href="https://www.thenationalnews.com/business/economy/2024/02/05/feds-jerome-powell-says-it-is-prudent-to-wait-on-cutting-us-interest-rates/" target="_blank">interest rates</a>, which are at their highest levels in 23 years. The Fed raised interest rates 11 times in its quest to reign in inflation, which had peaked at 9.1 per cent in 2022. By doing so, it has hoped that raising borrowing costs would cool demand and, consequently, inflation. The US central bank has so far been largely successful but officials say most of the progress is in the goods sector. While Tuesday's figures were not expected to impact <a href="https://www.thenationalnews.com/business/economy/2024/02/01/fed-jerome-powell-interest-rate-cuts/" target="_blank">March's decision</a> – where rates are likely to remain unchanged – it could contribute to growing confidence the Fed has hoped for in bringing inflation down to its 2 per cent goal. US central bank officials have not indicated when they would begin cutting rates, only going so far as to say they expect to do so some time later this year. The Fed anticipates it will issue three quarter-rate interest cuts this year, according to their December projections. Those projections will be updated after their meeting next month. Tuesday's inflation report also begins a crucial week of data, including the latest figures on retail spending and the University of Michigan's consumer sentiment survey. Last month's Michigan survey showed that consumer sentiment had climbed to a two-year high.